Will Palo Alto kill its downtown just to save it?

In the face of vocal public opposition, Palo Alto’s elected leaders appear to be backing away from approving John Arrillaga’s 27 University Ave. office and theater project.

Critics call the four office-building project at the entrance to Palo Alto’s downtown way too big, even though Arrillaga has shrunk the project by 50,00 to 210,000 square feet. He also cropped its top height by 57 feet to 103 feet. The city council recently scrubbed a public vote on the project and asked more developers to submit proposals for the property.

That’s not a good sign for Arrillaga, one of the world’s richest men, who had planned to donate the project to his alma mater, Stanford University.

It’s true that the project’s traffic impacts need to be thought out. But those who say the project will irrevocably harm downtown Palo Alto are probably on the wrong side of this fight.

This project would relieve downtown’s incredibly tight office market, which is feeding a race to convert ground-floor retail space into office. That takes needed services away from residents and workers, and reduces the vitality of downtown.

The competitive market is also pushing smaller office tenants out of the city, brokers and executives have told me.

One tenant, Palantir, has gobbled up 225,000 square feet in the area, according to Thomas Fehrenbach, the city’s economic development director.

Other companies just can’t compete for rental space due to high leasing rates. So other cities will become the beneficiaries at Palo Alto’s expense. This means innovative small startups — and their workers’ dollars will go elsewhere.

While not perfect, 27 University Ave. could provide the room Palo Alto needs to grow by creating a pressure-relief valve for office-space demand. It would also keep downtown workers near retail businesses.

That would work to keep University Avenue as the kind of livable, diverse and exciting place it is today — rather than turn it into a “soulless,” out-of-scale office park, critics claim.